In recent weeks, Bitcoin has experienced a consistent upward trend, propelled by an improving risk-on sentiment across financial markets.
The cryptocurrency is currently valued at approximately $74,420, reflecting a 5.2% increase over the past day as per CoinGecko data. Concurrently, the S&P 500 index closed Monday with a 1% gain, its highest daily close since February 28 when tensions escalated between the U.S. and Iran.
Since February 28, Bitcoin has appreciated by about 13%, demonstrating its role as a safe haven during crises. Meanwhile, the S&P 500 and Japan’s Nikkei have seen gains of roughly 1%, while gold prices have declined by around 9% in this period.
This performance indicates enhanced risk-on sentiment, driven by reduced bearish positioning in options markets, alongside increased ETF and spot buying activities, according to a report from Glassnode. The improvement is also attributed to de-escalation signals amid U.S.-Iran/Middle East tensions, as noted by Andri Fauzan Adziima, research lead at Bitrue. He pointed out that easing oil spikes, reduced risk-off pressure, a softer core CPI print, and rebounding spot Bitcoin ETF inflows absorbing supply have contributed to this trend.
On April 8, Iran and the U.S. agreed on a conditional two-week ceasefire, although the situation remains delicate with ongoing U.S. blockades of Iranian ports and potential further negotiations as indicated by reports from the Associated Press.
Bitcoin’s market outlook has notably improved within the options space amidst a relatively stable geopolitical environment. The 25-delta skew, which reflects bearish positioning and sentiment, improved from -10% to -4.5%, based on Deribit data. Typically, during downtrends, a declining skew signifies that investors are paying premiums for downside protection.
However, the current improvement suggests reduced bearish exposure, indicating easing selling pressures. Despite these positive signs, Glassnode analysts noted that a decline in Volatility Spread points to sustained cautious sentiment among investors.
A recent increase in U.S. spot Bitcoin ETF netflow signals strong interest and demand from traditional finance participants, as highlighted by last week’s $786 million inflow.
Adziima emphasized that the recent rally towards $75,000 is largely driven by spot activities. He noted that robust ETF inflows, coupled with declining futures open interest and funding rates, suggest deleveraging and healthier momentum in Bitcoin markets.
Should Bitcoin sustain its position above $75,000, it could potentially rise to $80,000 if ETF inflows and institutional demand remain strong, according to Wenny Cai, Founder of Anchored Finance. However, persistent inflation, restrictive Federal Reserve policies, and potential deterioration in global risk sentiment due to the ceasefire’s end or further Middle East tensions could reintroduce volatility, pushing Bitcoin back within its prior trading range, experts caution.
Despite current optimism, users on the prediction market Myriad, part of Decrypt’s parent company Dastan, have assigned a 4.6% probability that the Fed will cut rates by more than 25 basis points before July, indicating ongoing investor caution.
While crude oil prices fell below $100 per barrel, Myriad users still anticipate a potential rise above $120, assigning a 75% likelihood to this scenario.